Duncan Defends Planned Switch to Direct Lending in Appearance Before House Panel

March 03, 2010

Testifying before the House education committee on Wednesday morning, Education Secretary Arne Duncan defended the Obama administration's plan to move all colleges to direct lending and said such a switch could still be accomplished by July without major glitches.

At the committee hearing on President Obama's proposed education budget for the 2011 fiscal year, Mr. Duncan dismissed concerns raised by Republican members that the switch to direct lending would be too difficult for colleges to accomplish quickly.

"We understand this transition, and what a big deal it is, and we want to make sure we do this absolutely smoothly if possible," Mr. Duncan said.

The Student Aid and Fiscal Responsibility Act, which would end bank-based lending to students and move to 100-percent direct lending, in which federal money is lent directly to students, would require that all colleges switch to direct lending by July 1. The House passed the bill in September, but it has been stalled in the Senate.

Thousands of colleges have switched to direct lending on their own in the past few years, Mr. Duncan told the committee in response to several questions. For most institutions, the transition has taken place in a matter of weeks, he said.

"We've gone from 1,000 universities participating to 2,300 participating, and I don't think you've heard a peep," he said. "There haven't been any huge stories about lack of service."

Republicans, though, repeatedly questioned the wisdom of switching to direct lending this summer, citing fears that students would be unable to get their loans in time for fall classes.

Rep. Glenn Thompson Jr., a Republican of Pennsylvania, argued that the institutions that voluntarily switched might not represent the direct-lending experience nationally. Large colleges have an easier time with direct lending than do smaller institutions because they have more resources, he said.

"I think we've cherry-picked, voluntarily, those who are best adapted," Mr. Thompson said. "What sort of Plan B does the department have in place in case the plans to convert don't go as smoothly as what you'd like?"

Reiterating that many colleges have already switched successfully, Mr. Duncan said the department has "Plan A, Plan B, Plan C." But he declined to provide details on alternate plans.

"We're really focused on Plan A right now," he said.

Questions on Teacher Training

Mr. Duncan defended the cost of the Obama administration's education budget for 2011 at a separate hearing on Capitol Hill last week, telling the House Budget Committee that a proposed 7.5-percent increase in education spending was necessary for long-term economic development. Questions at Wednesday's hearing, which lasted more than 90 minutes, dealt with policy issues.

The questions about student lending were a rare moment in the spotlight for higher education at a hearing that focused on elementary and secondary education. Many questions tackled the Obama administration's proposed changes in the Elementary and Secondary Education Act, the federal law governing precollege education that is now called No Child Left Behind. The act is overdue for renewal, and although legislation to reauthorize it has not yet been introduced in Congress, the issue is a top priority for legislators, said the committee's chairman, Rep. George Miller.

"We would really like to get this done this session of Congress," said Mr. Miller, a Democrat of California.

In response to questions about proposed changes in the act, Mr. Duncan, who has often criticized schools of education, said colleges and universities should be more focused on providing hands-on training and should instruct future teachers on how to use data.

He repeated his support for alternative-certification programs, which bypass teachers' colleges to draw potential teachers from other fields. Some teachers' colleges are skeptical of such programs, which have become a point of controversy in discussing revisions to the Elementary and Secondary Education Act.

"I always think these are false dichotomies," he said of the divide between traditional and alternative certification. "We just need more great teachers coming in."